California and Illinois have a number of similarities — and that’s not a good thing.

Illinois is teetering on the edge of fiscal solvency, and there does not appear to be a positive resolution in sight. It was not long ago that California flirted with that precipice. Though we have retreated from it a bit, though at the steep cost of even higher taxes, lingering debt and pension obligations mean we are far from being out of danger, and we must heed the warnings of Illinois to avoid falling right back into that woeful situation.

Both states suffer from high debt and unfunded pension liabilities. California’s pension deficit is pegged in the hundreds of billions of dollars, and its two main pension funds have roughly only about two-thirds of the assets needed to cover future liabilities. Incredibly, Illinois is in even worse shape. Even by its optimistic official estimates and actuarial assumptions, the state’s pension systems have a $130 billion unfunded liability and sport a dreadful combined funding ratio of less than 38 percent.

This poor performance is reflected in the states’ credit ratings. California had the worst rating in the nation for a number of years, but Illinois’ deterioration caused it to claim that dubious title beginning in 2012. Rating agencies Moody’s Investors Service and S&P Global Ratings recently downgraded Illinois’ general obligation bonds again (for the eighth time in eight years, in the case of Moody’s) to just one notch above junk status. It is the lowest ranking ever given to a U.S. state, Bloomberg reports.

Complicating things further, state Comptroller Susana Mendoza, who has the unenviable task of performing a triage on the state’s bills that need to be paid, has warned that a court decision regarding Medicaid payments means that, together with mandatory payments for debt, employee paychecks and pensions, and some school funding, the state’s monthly expenditures will exceed its revenue before even considering “discretionary” spending for things like school buses, domestic violence shelters and some ambulance services. It could even be forced out of the lucrative Powerball and Mega Millions lotteries if a budget agreement is not reached by the end of the month, which also marks the end of the current fiscal year. The state has, additionally, racked up unpaid bills totaling nearly $15 billion — equal to about 40 percent of its annual operating budget.

Their high taxes and burdensome regulations have made California and Illinois among the worst places in the country to do business. They earned two of the three “F” grades (along with Connecticut) in the 2016 Thumbtack Small Business Friendliness Survey, and ranked 50th and 48th, respectively, in Chief Executive magazine’s annual “Best and Worst States for Business” survey.

“We’re like a banana republic,” Gov. Bruce Rauner said last year after the legislature similarly missed a deadline to adopt the budget. “We can’t manage our money and employers don’t have any confidence in us. They won’t come here if we can’t get our act together and balance our budgets.”

The Republican governor and Democratic-controlled legislature have been locked in a budget stalemate for two years. Democratic lawmakers have prioritized more taxes ahead of needed structural reforms, while Rauner has pushed to pay down debt, enact property tax relief and impose a spending cap and term limits.

California, at least, has paid down some debts, and adopted some minor pension reforms in the form of the California Public Employees’ Pension Reform Act, which took effect in 2013. Much work is still needed to avoid the fate of Illinois, however. And we seem to be headed in the wrong direction, as lawmakers continue to adopt record spending levels and levy even more taxes, like the $52 billion in gas tax and vehicle registration fee hikes that taxpayers will be forced to pay over the next 10 years. And that’s just scratching the surface if Sacramento passes the “single-payer” government takeover of all health care in the state, which will require hundreds of billions more each year.

Illinois is now experiencing the problems of California’s recent past. Recall the Golden State’s sizeable deficits of $38 billion in 2003, and $26 billion in 2009, when it had to issue IOUs for local governments, contractors and personal income tax refunds. If we don’t get a handle on our debts, without bleeding employers and individual taxpayers dry in the process, Illinois could be our future as well.

Adam B. Summers is a columnist with the Southern California News Group.

Adam B. Summers is an editorial writer and columnist with the Southern California News Group, originally hired by the Orange County Register. He has written extensively on California and national politics, individual liberty, law and economics, public pension reform, occupational licensing, privatization, government reform and various other political and economic issues.

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